Friday, December 30, 2011

Interesting post by Frank Jacobs at Big Think titled "The Underwritten States of America." Mr Jacobs blogs about, of all things, maps. This one (and its companion at the link), identifies medical insurance underwriting "zones" in use in 19th century America. I must admit that, after almost thirty years in "the biz," I'd never heard of such a thing. It does make sense, though, especially given the state of health care "back in the day:"

[Click on map to embiggen]

For a complete explanation, as well as an updated map (in color!), go read the whole thing. It's pretty interesting.

UPDATE/CORRECTION: As Mike points out in the comments section, it's more likely that this is a life insurance rating tool. Still worthwhile, of course.

Thursday, December 29, 2011

One of the primary benefits touted by proponents of MassCare was that forcing people to buy health insurance would drive down the cost of health care. On its face, this was clearly illogical, but enough folks bought into the idea that it became "common knowledge." Still, it was certainly the right of Bay Staters to test the hypothesis, which they have been doing now for some years.

The good news is that this gives the rest of us a way to gauge the relative success of that experiment:

Okay, that's one data point "mittigating" against the thesis. Perhaps there are others which support it.

Or maybe not:

"Governor Romney inherited rising relative expenditures on health facilities, which fell slightly in his second year, but then continued to rise"

Darn.

Still, that's just Massachusetts; perhaps the other 57 states also experienced these trends. Add in the massive expenses associated with Medicaid and other Federally mandated programs, and surely the differential evaporates.

Stay with me here:

"As of 2009, Utah had the 13th least regulated health system in the country whereas Massachusetts had the second most regulated health system and Texas was in between, having the 29th most regulated system."

Now, each of those states has very different demographics, but they are still bound by the realities of budgets and requirements. Neither Utah nor Texas force their citizens to buy insurance, so based on the original hypothesis it would be reasonable to assume that these states would see dramatic increases in the cost of health care.

And yet the actual figures don't bear this out. The empirical evidence fails to demonstrate that forcing people to buy insurance reduces the cost of health care. So what now?

Back in the day, tax increases were voted on, if not by the taxpayers, then at least our duly elected representatives. But the law we had to pass to find what new taxes are in it does away with all that silliness.

The new tax starts out at a modest $1, quickly followed by a 100% increase; future increases are pegged to the rate of inflation. If it makes you feel any better, the tax starts next month, and the IRS may well issue guidelines regarding it sometime next year.

Or not.

Regardless, you'll be paying that tax as part of your increased premiums.

What's that?

You want to know what this tax pays for?

Fair enough:

"The goal ... is to answer such basic questions as whether that new prescription drug advertised on TV really works better than an old generic costing much less."

Silly me, thinking that was the job, already funded by our existing tax-structure, of the FDA. By the way, this is another case of health insurance being conflated with health care: only those with private insurance are being taxed to pay for this new agency, while all health care consumers "benefit" from it.

I find this odd because one would think that this falls under the purview of HHS Secretary Shecantbeserious, not J Edgar Hoover. It's true that the FBI has been involved with the Maxim Healthcare case, but that's in addition to HHS and related agencies.

In fairness, we haven't heard Prime's side of the story, nor do we know just how wide-spread the (alleged) practice is. One wonders whether this is the tip of an iceberg, or common business practice. As we saw in the LabCorp case, what HHS calls "fraud" may really be nothing more than breaking arbitrarily-set rules.

Jacob Irwin hosts next week's CavRisk, and wants your risk-related post. Entries are due by Monday (the 26th).Submit your post via the The BC WorkAround.Once there, you'll be asked to provide:■ Your post's url and title■ Your blog's url and name■ Your name and email■ A (brief) summary of the post ("Remarks")At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Wednesday, December 21, 2011

Sally Pipes is, of course, well-known in her role as President of the Pacific Research Institute. Her main focus is health care studies, and she brings that expertise to bear on the canard that socialized health care is "a good thing."

So much for efficiencies of scale and the purchasing power of government. As we've pointed out many times, none of the government-run systems have had any more long-term success in cutting costs than our own (soon to be gone) public/private hybrid. And they deal with those losses by reducing actual health care.

For example, "the NHS is raising the threshold at which patients qualify for treatment and lengthening wait times for surgeries determined “non-lifesaving.” There's a term for this kind of system, what could it be?

And yet, as Ms Pipes mentions, "[a] report released in October by Britain’s health regulator found that a stunning 20 percent of hospitals were failing to provide the minimum standard of care legally required for elderly patients."

"Canada’s single-payer, government-run system — where any private health care is outlawed under the Canada Health Act — is similarly failing its patients."

In a recent survey of Canucks with chronic conditions, many expressed dissatisfaction with their level of care. But hey, it's free: beggars can't be choosers.

But of course it's not "free:" in addition to the major taxes that pay for the system, patients still have out-of-pocket expenses, sometimes major ones. And if you're in need of more immediate or extensive care well, there's no wall on our Northern Border, is there?

Over 6 years ago, we noted Prudential plc's horrific sales promotion encouraging its agents to celebrate terrorism. Apparently, the folks at Munich Re aren't longtime IB readers, else they would have known that this was a very bad idea:

Reinsurers are essentially wholesalers of insurance, and are generally "background noise" in the press. Individuals don't buy coverage from them (well, not directly), and many (most?) folks have never heard of these vendors.

So perhaps the rocket surgeons in charge of Munich Re believed that this would fly under the radar, with no one the wiser.

And to an extent, they were quite right:

"[T]he party had taken place to reward salesmen in 2007 ... There were about 100 guests and 20 prostitutes were hired."

What is it about insurers and ratios?

The good news is that the folks responsible for this little adventure are now gone and the company has since "introduced a new code of conduct."

Well, then, how about some corroboration from an actual employer who can attest to all these things?

Keith Ashmus, a co-founding partner of Frantz Ward LLP, helps run a medium-sized law firm in Cleveland. Of their 120 employees, about 70 are attorneys, and the rest are there to keep things running smoothly. They've been participating in Medical Mutual of Ohio's COSE (Council of Smaller Enterprises) small group health insurance plan for some time, and been quite satisfied.

"By purchasing our plans through COSE, we have not had to pay a two percent premium tax on group health insurance as mandated under Ohio law."

While 2% may not seem like much, if one posits a $500,000 annual health insurance bill (a not unreasonable supposition), then that represents $10,000 in savings. It's unclear (but unlikely) whether that exemption will still be available through the Exchanges.

And so the firm has been choosing "grandfathered" renewal options in order to avoid the problem. The challenge, of course, is that this has become increasingly difficult, and expensive. Not to mention the fact that these will be phased out rather soon, anyway.

"Given our pay scale, it is unlikely that our employees will qualify for subsidies on any state exchange."

There are two issues implicit here: first, there's the tacit acknowledgement that they'll likely be doing away with their group plan altogether. Second, should Ohio choose to go with a Fed-run Exchange, there'll be no such subsidy availableregardless of their employees' economic status.

"Then in 2018 and later, the administration of the so-called “Cadillac” tax appears likely to be incredibly burdensome to employers."

Quite right, and as Mr Ashmus notes, this will be a double-whammy: first, there's the added expense of calculating the various expenses and such, and then reporting these to the carrier, which must then determine whether or not a tax is due (and don't forget that the added expense for this "service" will be borne by the employer, not the carrier). Finally, if there is, in fact, a tax due, well, someone's got to pay it, and (again) it won't be the carrier.

One more item I found interesting: with all the emphasis and press on so-called "wellness" programs, the nagging question has always been "and so?" Well, here 'tis:

"In an entity as small as ours, the positive impacts of wellness programs are unlikely to be felt in our health care costs, since community rating puts everyone’s experience together.":

This is the ugly little secret: unless you have a self-funded plan, your rates are determined primarily by the experience of the pool in which you've been placed. So even though your group may have had a "good" year, your rates are going to go up to offset the sicker groups.

But here's the real problem, also neatly put by Mr Ashmus:

"The uncertainty about what will happen with the Affordable Care Act ... is a definite barrier to planning for our insurance benefit program and expansion of our firm."

This goes beyond just the insurance issues, of course; how does one plan if there's so much doubt about whether or not what you choose today will be doable, or even legal, tomorrow?

Perhaps someone should have read it before they passed it.[Hat Tip: FoIB Holly R]

In other words, typical government-provided health "care." And these apparently represent only "the tip of the iceberg." In some cases, patient dehydration had grown so rampant that doctors were forced to prescribe dihydrogen monoxide.

Of course, that's when health "care" providers could actually be found: "Buzzers went unanswered, several patients were left sitting in soaking bedclothes for hours, or in their own faeces."

Annuities aren't for everyone, but they do have a place in many folks' financial plans. Growth in an annuity, unlike a CD, is tax-deferred, which can allow for higher growth. And one can "annuitize" an annuity, which can provide for a lifetime income stream.

There are some downsides as well, of course: significant penalties if one cashes out too early, and the taxes are deferred, not eliminated.

The CE requirement is there to make sure that agents are explaining these advantages and disadvantages, and that the client understands all the risks, benefits and rules of what could be a major purchase. Above all, it's designed to ensure that such purchases are appropriate.

Friday, December 16, 2011

You take a lump sum of money (say, from an under-performing CD) and put it in one of these newfangled "longevity annuities." After a while (say, 30 years), it begins to pay out a lifetime stream of income. Now, if you die before you get to that magic time 3 decades hence, well, you're outta luck (unless you elected one of those innovative "non-forfeiture options").

HHS has now reported that, thru December 2, the Early Retiree Reimbursement Program (ERRP) has paid out just over $4.5 billion or almost 91% of the authorized funds. This total amount was distributed among approximately 2,700 group sponsors of pre-Medicare retiree plans.

The HHS report shows that the UAW retiree trust has received over $387 million - which is, all by itself, 8.5% of the total distributed.

Other facts revealed in the report:

• There are 17 plans that each received more than $50 million, and together these 17 plans account for a bit over $1.9 billion, or about 42% of the total ERRP payments. • Only 3 of these top 17 are corporate plans (Boeing, Verizon, and AT & T) - - the remaining 14 are either union funds or public employer retiree plans. • There are 66 plans (including the top 17) that each received $10 million or more, and together these 66 plans account for almost $2.9 billion, or about 63% of the total ERRP payments.

If you scroll thru the entire HHS report, you'll see a large number of plan sponsors that are clearly union funds. Some of the corporate retiree plans in the report likely contain a lot of union retirees - for example, Verizon and AT & T probably contains a significant number of retired members of the Communication Workers of America; Boeing probably contains a large number of IAM and other union retirees too. You'll also see a large number of state and municipal plans that I'm sure also contain a lot of public employee union retirees. In other words, while it's not possible using this HHS report to pin down the exact share of the $4.5 billion that was paid to plans covering union retirees - it seems very unlikely that share is less than 50%.

Recall that ERRP's $5 billion funding was part of the health care reform act. The administration says that these funds were intended to provide financial assistance for pre-Medicare retiree group plan sponsors thru 2013 - keeping in mind that the exchanges and other main provisions of the reform act become effective in 2014. The attached document states that HHS stopped accepting new applications for these funds after May 6, 2011 - not even a year after the first applications were accepted. HHS has now announced that even the plans already approved will not be reimbursed for any claims incurred after December 31, 2011.

So how did it happen that the funding was exhausted so quickly? Was it just sloppy actuarial work?

I don't think so. Here's my guess – ERRP was never intended to do what the administration told us. Instead, it was intended all along as a big "thank you" to the unions (including public unions) that had helped with the 2008 election. I recall that the UAW submitted its complete application almost immediately - almost as though they knew in advance what to do. Other types of plans found out about ERRP in due course but in my opinion, payments to other plans were not part of the main intent. However those payments did serve a useful purpose as a smoke screen; I mean, an extra couple billion might cover the tracks nicely and what's another couple billion anyway?

1. The City of Minot in North Dakota has over 2000 plan participants and has received $112,933 in ERRP reimbursements. As a direct result of these reimbursements the City was able to reduce 2012 premiums by 17 percent.

2. Silgan Containers Manufacturing, located in California, has received $246,152 in ERRP reimbursements. Silgan will use funding to offset claims costs by about 5 percent.

3. To date, Elkhart County in Indiana, has received $84,175 in ERRP reimbursements. They have been able to use this funding to help maintain coverage, and keep costs down, for over 1400 plan participants. Specifically, with the help of ERRP funds, Elkhart County was able to reduce employee and retiree premiums for 2011 and maintain that lower rate for 2012.

4. In Minnesota, East Central Energy has over 250 plan participants and has received $13,272.37 in ERRP reimbursements. East Central Energy has used ERRP funds to offset increases to claims costs by 7 percent.

These 4 plan sponsors appear to include fewer than 5,000 people and the total ERRP payout for these plan sponsors was less than $500,000. Yet the HHS report claims "ERRP has benefited over 5 million people to date" and has issued payments in excess of $4.5 billion..

Why does HHS offer examples including only one-tenth of one percent of the people it claims to have "benefitted ??? Why does HHS offer examples that comprise only one one-hundredth of one percent of the total payments? Is it because HHS tried but could not find better examples among the dozens of large plans that cover many thousands of people? Is it because HHS wants the public to believe that most of the money is going to small plans--rather than to the giant plans such as UAW and The Ohio Public Employee Retirement System? Is it because (as I suspect) there was some hidden agenda behind ERRP that has now been carried out? I doubt we’ll ever know why HHS chose such lame examples or learn whether there was, in fact, some hidden agenda.

Regardless, and whatever the explanation may be, the examples HHS offers are at BEST laughable.

So what is "metadata?" Basically, it's all the little changes and notations that aren't visible when reading a document, but are contained in the file itself. This could include deletions, additions, redactions, you name it.

HHS and the Obama administration are taking credit for saving or creating health insurance coverage for 2.5 million adult children . . . a paradoxical term at best, but I digress.

Administration analysts found that nearly 36 percent of Americans age 19-25 were uninsured in the third calendar quarter of 2010, before the law's provision took effect. That's over 10.5 million people.

By the second calendar quarter of 2011, the uninsured dropped to a little over 27 percent, or about 8 million.

The difference is nearly 2.5 million more young adults getting coverage.

Yeah, I suppose.

These are the same folks that say unemployment compensation drives the economy and saves or creates jobs.

Wednesday, December 14, 2011

Recently received emails from both Anthem and Medical Mutual, announcing changes in how cholesterol-lowering meds will be handled going forward. Effective this month, the generic form of Lipitor is being made available to insureds of both carriers.

From Medical Mutual:

"Medical Mutual® and its Family of Companies support the use of generic drugs as an effective way to keep costs down for our members and plan sponsors. This position is important given recent news stories about United Healthcare, Coventry, Catalyst Rx and Medco Health Solutions, Inc. (Medco), our pharmacy benefit manager, promoting brand name Lipitor® instead of its much-anticipated generic."

What this seems to be saying is that at least a few other carriers (and MMO's own PBM) are still pushing the more expensive brand-name version, with its concomitant higher co-pays.

The email goes on to note that "atorvastatin" (the "first generic equivalentfor Lipitor") is available now, and other manufacturers' versions should be available beginning next summer. Both of these developments would seem to be good news for consumers, since competition generally means lower prices.

Anthem's announcement would seem to echo this theme:

"As of 12/01/11, the generic drug atorvastatin has been added to the preferred brand tier and is being processed with a preferred brand copayment for Medicare MAPD and PDP plans."

But, this doesn't hold true for "regular" insureds:

"Effective immediately, Express Scripts* will continue to dispense Lipitor through the home delivery program. Members participating in the home delivery program will pay the same copayment as for the generic atorvastatin."

One would think that they'd be pushing the generic over the brand-name, but that doesn't seem to be the case here. Not sure what to make of that.

Tuesday, December 13, 2011

The Obama administration announced plans Friday to wind down a $5 billion fund to pay for health insurance for early retirees, including the institution of a Dec. 31 deadline for employers to tap into the remaining funds.

It seems $5 billion doesn't go very far these days.

I must be getting old. I can remember when $5 billion seemed like a lot of money.

Are Georgia doctor's leaving Medicare? Quite a few will not accept ANY Medicare Advantage patients while others will only participate in one or maybe two plans. If you have original Medicare + Medigap your odds of having a doctor treat you improve dramatically.

As in years past, Congress is slow of foot to do anything about permanently fixing Medicare and will most likely follow the same path as before and patch the reimbursement system with what is referred to as the "doc fix".

Unless lawmakers act before the end of the year, doctor reimbursements are scheduled to be reduced even as providers complain current reimbursement rates don't cover the cost of care.

The result: Many doctors are declining to take on new Medicare patients and many are thinking about disenrolling in the system, reports the Association of American Physicians and Surgeons, which has historically opposed Medicare.

The pay cut, unless Congress overrides it, will be roughly 30%.

"Disenrollment is a way to evict occupiers from doctors' offices and the patient-physician relationship," suggests Dr. Jane M. Orient, the association's executive director. "Occupiers include bureaucrats, bounty-hunting auditors, federal prosecutors waiting for doctors to trip up on complex rules -- and AMA [American Medical Association] officials and committees who make up complicated codes and dictate the 'relative value' of all covered services."

Seems "occupiers" is the latest buzz word for vultures.

I like it.

since 1996, the system has been larded with new requirements that have increased bureaucratic hassles and imposed greater costs on providers for everything from enrolling in the system to billing procedures, the association said. Those doctors who wish not to participate in the program need to opt out every two years.

More government interference in the private sector. Another jobs killer except in this case it is a health care killer.

"Under the U.S. Constitution, Congress has no express authority to compel physicians to enroll in a government program in order to serve their patients, or to regulate the practice of medicine," she said in an article published in the winter issue of the Journal of American Physicians and Surgeons.

There's that pesky Constitution getting in the way again.

"Formally opting out of Medicare has grown in popularity. But a tantalizing alternative approach is emerging: disenrolling from Medicare altogether," Schlafly wrote. "We are unaware of a court case establishing or forbidding this option. Government may prefer not to test its authority over disenrolled physicians rather than risk a new precedent against its power.

"A consequence of the 'Obamacare' litigation may be to resolve this issue too. If 'Obamacare' is invalidated for going beyond the constitutional authority of the federal government, then that precedent may also limit federal authority over private contracts with disenrolled physicians."

This is, perhaps, a bit trickier than it may seem: there's a difference between religion and faith. And of course it's not so easy to quantify a chaplain's efficacy compared to, say, the surgeon's. Still, the concept is intriguing, and gaining momentum:

Monday, December 12, 2011

Even more proof that MLR (Medical Loss Ratio) as mandated by Obamneycrap is stupid. The New York Dept of Insurance has decided that health insurance companies overcharged policyholders in 2010 and has ordered them to refund $114 million.

Empire’s refund payment to consumers was tallied at a little over $61 million. The other big New York player, UnitedHealthcare, has an affiliate (Oxford) involved in the refund.

Empire BlueCross BlueShield is New York’s largest insurer. In terms of overall membership, across business lines, the for-profit plan insures nearly 6 million New Yorkers. It is New York’s second largest insurer in the Small Group market, with about a 15% market share.

Empire Blue Cross, the states largest insurer is expected to refund a little over $61 million to some 6 million residents.

Did you buy a Medicare Advantage during open enrollment and now regret it? The Medicare Advantage Disenrollment Period begins in January and ends on February, 14.

Your doctor does not accept that MA plan and you feel you are stuck.

Not necessarily.

If you signed up for an Advantage plan and now regret it, you will want to return to original Medicare with a wide choice of doctors. Good news! You can disenroll from your Medicare Advantage plan between January 1 and February 14.

You an disenroll by doing any of the following:

If you have a MAPD (Medicare Advantage with Part D) you can send a letter to your carrier telling them you wish to disenroll. You can also enroll in a new Part D plan which will automatically disenroll you from the MAPD.

If you have an MA plan without Part D, you must request disenrollment from your MA plan which will start an SEP (Special Enrollemnt Period) allowing you to enroll in a new PDP.

Disenrolling in an MA plan may also trigger a GUARANTEED ISSUE situation allowing you to enroll in any Medigap plan without answering health questions.

If you enrolled in an Advantage plan for the FIRST TIME, either when you first became eligible for Medicare Part B or you left Medicare to join an Advantage plan. If you leave the Advantage plan during the first 12 months you may have a guaranteed right to return to Medicare and a Medigap plan.

You should apply for a new Medigap plan no later than 63 days following the end of your Medicare Advantage coverage. Your new Medigap plan cannot become effective before the date of your application.

You may also have other guaranteed rights to purchase a Medicap plan without answering health questions. Call us. We can help.

Even if you do not have a guaranteed right to purchase a GA Medigap plan you may still qualify if you are in reasonably good health. We have helped people age 80 and younger find an affordable Medigap plan once we determine they still qualify.

But the stats for those of the fairer sex aren't much better: "Among elderly women, the excess mortality of the never-married compared to the married has increased ... there are indications of an increasing excess mortality of the widowed."

Friday, December 09, 2011

As we've noted before, Bob and I contribute to a consumer advocate's bulletin board, where we try to help folks resolve insurance-related problems. Over and over again, it becomes apparent early on that most folks don't really understand what they've bought, how it works, or what's actually covered (or excluded), all because they bought the plan and then filed it away without actually reading through it.

Courtesy of Humana, here's a pretty easy-to-understand but nonetheless comprehensive primer on how you can get the most out of your health insurance:

As we've pointed out (repeatedly), no rational employer is going to continue offering group health benefits to employees once the Exchanges come on-line. FoIB Holly R sent me an article this morning that asks an intriguing question regarding that assumption: not about whether it's valid (it is), but what it will cost the employee once that happens.

It's an excellent question, one which I had not previously seen addressed: how much is it likely to cost Joe Lunchbox to move from his employer's group health plan to one offered through the Exchange (and potentially subsidized by his fellow taxpayers)?

Russell Hutchinson hosts next week's CavRisk, and wants your risk-related post. Entries are due by Monday (the 12th).Submit your post via the The BC WorkAround.Once there, you'll be asked to provide:■ Your post's url and title■ Your blog's url and name■ Your name and email■ A (brief) summary of the post ("Remarks")At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Thursday, December 08, 2011

Apparently, those Medicare Advantage plans are still more popular than ever. So much so, in fact, that HHS Secretary Shecantbeserious has recognized that not everyone who wanted "in" was actually able to sign up (cf: blind squirrels).

Just got this in email from Anthem:

"CMS officials are providing flexibilities to current Enrollment Guidance to ensure all enrollment requests submitted during AEP are processed. The extension is for this AEP only.

[Carriers and agents] may assist beneficiaries in completing an enrollment request if the contact was initiated prior to December 8, 2011. This would only include call backs to beneficiaries who we were unable to assist on or before December 7th, due to high call volumes or difficulty in accessing CMS' On-line Enrollment Center (OEC).

All return calls must be made, and applications completed and received by 11:59 p.m. local time on Saturday, December 10th."

Heh.

UPDATE: Clarification on who's eligible for the extension:

All marketing and/or soliciation activities must end with the close of AEP as of 11:59 p.m. on December 7, 2011.

Agents may not accept new AEP applications after December 7, 2011.

Agents who receive inquiries about enrolling in a Medicare plan after AEP should refer the beneficiary to the Medicare toll-free information line (1-800-633-4227) or have the beneficiary call the government-funded State Health Insurance Program (SHIP).

If you have received AEP applications today or later, please submit the enrollment for processing. [Carrier] enrollment department will verify eligibility.

In many areas of the country Blue Cross dominates the health insurance market. Some would say they have an unfair advantage because of their not for profit status.

However that argument doesn't fly with most Blue plans because most have long converted to either stock or mutual companies, and some are publicly traded.

Along comes Aetna and decides to take another track.

Aetna claims Blue has a competitive advantage because of a little known "most favored nation" status. According to Crain's Detroit Business News:

In its suit filed today in the U.S. District Court in Detroit, Aetna charges that in 2005, Blue Cross "implemented a scheme" to enter into "exclusionary contracts with hospitals under which it agreed to pay hospitals more money if the hospitals increased the rates they demanded to treat patients covered by its competitors' health plans."

That is interesting wording.

What a hospital, or any other provider, bills for charges is identical. However what they agree to accept as "paid in full" will vary. It may seem like semantics but there is a difference.

It's like Wal-Mart having a coupon sale on TV's. If you have the coupon you pay $200. If you don't you pay $250.

The list price is the same. The difference is, some folks pay less under terms of a contract. The contract is between the store and those with coupons.

In an interview with Crain's, Andy Hetzel, Blue Cross' vice president of corporate communications, said the company has used most-favored-nation clauses in its contracts only to negotiate the best prices so it can to keep premiums to customers as low as possible.

So what would happen if the MFN clause is rendered invalid?

Premiums (and out of pocket expenses) for Blue Cross policyholders would rise, but there is no guarantee premiums and OOP would drop for other carriers.

This is no different than Sunbeam coffee makers sold by Wal-Mart and other stores. If Wal-Mart buys 500,000 coffee makers from Sunbeam and J C Penney buys 30,000 coffee makers, who would get the better price?

About 10% of the population is left-handed, which is itself interesting because, just on the basis of common sense, one would think that the percentage would be closer to fifty. Apparently, it's a recessive trait, so lefties are left in the minority.

After almost 30 years in the insurance business, though, I can tell you that I have never seen the question "are you right- or left-handed?" on any application, and my P&C colleagues assure me that they haven't, either. But the Journal had an interesting article yesterday about the increased health risks that go along with being a lefty.

Frankly, I'm unconvinced that there's any reason for underwriters to be concerned. Still, it's interesting to contemplate, as this video explains:

Monday, December 05, 2011

The federal government, that would be "our" government, has awarded a contract to a firm to set up Obamneycrap health insurance exchanges. The $93.7 million dollar contract will create hundreds of new jobs . . . in Canada.

The health insurance exchanges are part of Patient Protection and Affordable Care Act, the March 2010 health care overhaul law. Millions of uninsured Americans will be able to buy private health insurance through the online exchanges starting in 2014. Taxpayer funds will cover the cost of premiums purchased through the exchange

Makes you wonder why Canadian programmers are superior to US programmers . . . or even those in India.

Well, because if we're looking to supplant the current private-industry model with a government-run one (and we are), what better way to demonize that pre-existing model than by pointing out how (apparently) unfair it it is.

Now, I was told that there'd be no math, but I find this interesting:

Out of the 3,100-odd claims covered by the report, "43 percent were from people whose insurers would not pay a medical bill." Now, there are an estimated 11 and a half million Buckeyes. If we take the (disputed) percentage of 15% uninsured, that leaves almost 10 million insured Ohioans, generating 1,300 claims.

That means that .0001% of Buckeyes had a big enough claims problem that they actually filed a complaint.

Ooooh.

By the way, the same report indicates that the Department of Insurance found less than 20% of those complaints credible.

Here's a question for the rocket surgeon-cum-reporter:

How many of these claims were disputed because the insured couldn't be bothered to either read his/her policy, or to stay in-network, or to have disclosed pre-existing conditions?

Here's a clue:

"The newspaper says the number of complaints is small compared with the millions of health claims handled in Ohio."

Obamneycrap has decided to treat the health insurance industry as a regulated monopoly. There are inherent problems in that approach.

The federal government has no direct authority to regulate insurance. That duty was deferred to the state under the McCarran-Ferguson Act of 1945.

Perhaps the same folks that never bothered to read the Constitution, or the law they passed known not so affectionately as Obamacare, either never read McCarron-Ferguson or chose to ignore it.

The second problem, as if issue number one isn't enough, is insurance is marketed in a competitive environment. In spite of comments otherwise, most insurance products (and certainly health insurance) do not operate as a monopoly.

Which brings us to the MLR debate. The federal government has decided it is within their purview to dictate policy benefits, premiums, who must be covered, the conditions under which a policy must be issued and also have decided what is an appropriate payout formula for claims.

MLR requires carriers that write fully insured group health insurance plans to reserve no more than 15% of premiums for administration and overhead.

Carriers that write individual major med may use no more than 20% of premiums for administration and overhead.

In other words, the medical loss ratio for fully insured group health must be no less than 85% and for individual major medical, no less than 80%.

Sounds fine to some but there is a flaw, especially when you consider carriers operate in a free market. If their price is too high they will not write new business and may well lose existing business.

If it is too low they may find themselves losing money which usually means an over-correction the other way moving them to the non-competitive side of the fence.

Some of the Congress critters have pointed to areas where a carrier (usually Blue Cross) have captured 60% or more of the market. Their view is, the carrier is unfairly controlling the market and effectively eliminating competition.

OK, let's play along with that for a moment in light of MLR.

Say HHS decides to investigate the carrier and wants to audit their books to see if they are adhering to MLR. Upon doing so, they learn the carrier's MLR for fully insured group health is 75% instead of the mandated 85% figure.

Will HHS then tell the carrier to lower their rates to come into compliance with the 85% rule? If the carrier does so will not that make them even more competitive, leading to an even more market domination.

But what if the audit shows the carrier has an MLR of 90%? Will they make them raise their rates?

I doubt it.

Basically in addition to being stupid, MLR punishes the competition if a carrier tries to pull a fast one and retain more premium dollars for themselves but also punishes those who are efficient.